Question stringlengths 14 166 | Answer stringlengths 3 17k |
|---|---|
Investment property refinance following a low appraisal? | The new payment on $172,500 3.5% 15yr would be $1233/mo compared to $1614/mo now (26 bi-weekly payments, but 12 months.) Assuming the difference is nearly all interest, the savings is closer to $285/mo than 381. Note, actual savings are different, the actual savings is based on the difference in interest over the year. Since the term will be changing, I'm looking at cash flow, which is the larger concern, in my opinion. $17,000/285 is 60 months. This is your break even time to payoff the $17000, higher actually since the $17K will be accruing interest. I didn't see any mention of closing costs or other expenses. Obviously, that has to be factored in as well. I think the trade off isn't worth it. As the other answers suggest, the rental is too close to break-even now. The cost of repairs on two houses is an issue. In my opinion, it's less about the expenses being huge than being random. You don't get billed $35/mo to paint the house. You wake up, see too many spots showing wear, and get a $3000 bill. Same for all high cost items, Roof, HVAC, etc. You are permitted to borrow 50% of your 401(k) balance, so you have $64K in the account. I don't know your age, this might be great or a bit low. I'd keep saving, not putting any extra toward either mortgage until I had an emergency fund that was more than sufficient. The fund needs to handle the unexpected expenses as well as the months of unemployment. In general, 6-9 months of these expenses is recommended. To be clear, there are times a 401(k) loan can make sense. I just don't see that it does now. (Disclaimer - when analyzing refis there are two approaches. The first is to look at interest saved. After all, interest is the expense, principal payments go right to your balance sheet. The second is purely cash flow, in which case one might justify a higher rate, and going from 15 to 30 years, but freeing up cash that can be better deployed. Even though the rate goes up say 1/2%, the payment drops due to the term. Take that savings and deposit to a matched 401(k) and the numbers may work out very well. I offer this to explain why the math above may not be consistent with other answers of mine.) |
How to avoid getting back into debt? | First, you've learned a very good lesson that quite a few people miss out on: notice how easy it is to get out of debt when you get a windfall of money? The trouble is that if a person doesn't have the behavior to maintain their position, they will end up in the same place. Many lottery winners end up being poor in the long run because their behavior is the problem, not their finances. If you feel that you're going to end up in debt again, this means simply that somewhere in your finances, your expenses exceed your income. Simply put, there's only two fundamental things that can be done: You can do one or the other, or both. Over budgeting, I prefer automation - automate your bills and spending by setting up a bill and spending account and when the money's gone, it's gone (you can tell yourself at that point, "I have to find another source of income before I spend more"). This not only helps you show where your money is going now, it also puts a constraint on your spending, which sounds like most of the problem currently. Many of my friends and I make our saved/invested money VERY HARD to access, so that we can't get it immediately (like putting it in an account that will require three or four days to get to). The purpose of this is to shape your behavior into actions of either increasing your income, decreasing your spending, or both. |
What to do with your savings in Japan | As an alternative to investing you'll find at least some banks eg. Rakuten that will give you preferential interest rates(still 0.1% though) just for opening a free brokering account. As this is still your individual savings account your money is as safe as it was before opening your account. I certainly wouldn't buy to hold any stock or fund that is linked to the Nikkei right now. Income stocks outside of the 225 may be safer, but you'd still need to buy enough of them that their individual results don't affect your bottom line. |
What should I do with $4,000 cash and High Interest Debt? | I see some merit in the other answers, which are all based on the snowball method. However, I would like to present an alternative approach which would be the optimal way in case you have perfect self-control. (Given your amount of debt, most likely you currently do not have perfect self-control, but we will come to that.) The first step is to think about what the minimum amount of emergency funds are that you need and to compare this number with your credit card limit. If your limits are such that your credit cards can still cover potential emergency expenses, use all of the 4000$ to repay the debt on the loan with the higher interest rate. Some answer wrote that Others may disagree as it is more efficient to pay down the 26%er. However, if you pay it all of within the year the difference only comes to $260. This is bad advice because you will probably not pay back the loan within one year. Where would you miraculously obtain 20 000$ for that? Thus, paying back the higher interest loan will save you more money than just 260$. Next, follow @Chris 's advice and refinance your debt under a lower rate. This is much more impactful than choosing the right loan to repay. Make sure to consult with different banks to get the best rate. Reducing your interest rate has utmost priority! From your accumulated debt we can probably infer that you do not have perfect self-control and will be able to minimize your spending/maximize your debt repayments. Thus, you need to incentivize yourself to follow such behavior. A powerful way to do this is to have a family member or very close friend monitor your purchase and saving behavior. If you cannot control yourself, someone else must. It should rather be a a person you trust than the banks you owe money. |
What could cause a stock to trade below book value? | A company's stock value is indicative of the market's collective belief of the future of the company. The relationship of between price and book value will vary according to the quality of the company, the category of stock, etc. In extreme cases, say Bank of America, the stock trades at a fraction of book, because BOA's books are a fantasy by most people's reckoning. |
How is it possible that a preauth sticks to a credit card for 30 days, even though the goods have already been delivered? | Open a dispute for the preauth. It is effectively a double charge, since you have already paid for the item. You can provide evidence of the other transaction. This forces them to go through some hassle and waste some time on the issue. |
Do corporate stock splits negate share repurchase programs? | Companies do both quite often. They have opposite effects on the share price, but not on the total value to the shareholders. Doing both causes value to shareholders to rise (ie, any un-bought back shares now own a larger percentage of the company and are worth more) and drops the per-share price (so it is easier to buy a share of the stock). To some that's irrelevant, but some might want a share of an otherwise-expensive stock without paying $700 for it. As a specific example of this, Apple (APPL) split its stock in 2014 and also continued a significant buyback program: Apple announces $17B repurchase program, Oct 2014 Apple stock splits 7-to-1 in June 2014. This led to their stock in total being worth more, but costing substantially less per share. |
I'm 13. Can I buy supplies at a pet store without a parent/adult present? | Perhaps a technicality, but minors do not have the legal capacity to bind a contract. Making a purchase from a store is a contract. I'm not a lawyer and there may be case law to the contrary or that creates exceptions, but my understanding is that purchases made by a minor may be void if later challenged. JohnFx's answer is true from a practical sense. But if you get turned away at a store, understand that they're probably just being careful to avoid headaches later. |
Credit card issued against my express refusal; What action can I take? | I would go speak to the bank manager. With Wells, you have to make sure it is the bank manager and not a service manager or something you are talking to (I learned that a few months ago). Tell her/him exactly what happened in detail and that you want the credit card closed and the credit inquiry removed from your credit report. Further, say that once all of that is done, you will decide whether to continue banking with them and whether any legal action is appropriate. If they give you any kind of push back, I'd get advice from a lawyer. The truth is they did open an account against your expressed wishes and it required them to check your credit so it does constitute fraud unless they can produce a signed document saying you agreed to the card. Edit: I just saw that this happened about a year ago. It may have been easier if you had done something at the time and may be more difficult if you've used the card in the meantime. |
Investing/business with other people's money: How does it work? | You can either borrow money... credit card, line of credit, re-finance your home, home equity line of credit, loan, mortgage, etc. Or you have other invest in your company as equity. They will contribute $X to get Y% of your company and get Z% of the profits. Note amount of profits does not necessarily have to equate to percentage owned. This makes sense if they are a passive investor, where they just come up with the money and you do all the work. Also voting rights in a company does not have to equate to percentage owned either. You can also have a combination of equity and debt. If you have investors, you would need to figure out whether the investor will personally guarantee the debt of your company - recourse vs non-recourse. If they have more risk, they will want more of a return. One last way to do it is crowdfunding, similar to what people do on Kickstarter. Supporters/customers come up with the money, then you deliver the product. Consulting practices do something similar with the concept of retainers. Best of luck. |
Why are residential investment properties owned by non-professional investors and not large corporations? | None of the previous answers calls out an important factor to residential property ownership bias towards individual investors. The amount of time spent managing (leasing, maintenance and rent collection) on single properties is much higher, per property, than larger investments. But what is mentioned in passing is the bias towards smaller investments. Fewer individuals have the capital to purchase and engage in the leasing of multi-tenant properties, but they are more likely to have the funds for smaller investments. So the smaller investor can both afford the entry costs, and the time investment, while the larger corporate entities benefit from the opposite proposition. |
Please explain the relationship between dividend amount, stock price, and option value? | 4) Finally, do all companies reduce their stock price when they pay a dividend? Are they required to? There seems to be confusion behind this question. A company does not set the price for their stock, so they can't "reduce" it either. In fact, nobody sets "the price" for a stock. The price you see reported is simply the last price that the stock was traded at. That trade was just one particular trade in a whole sequence of trades. The price used for the trade is simply the price which the particular buyer and particular seller agreed to for that particular trade. (No agreement, well then, no trade.) There's no authority for the price other than the collection of all buyers and sellers. So what happens when Nokia declares a 55 cent dividend? When they declare there is to be a dividend, they state the record date, which is the date which determines who will get the dividend: the owners of the shares on that date are the people who get the dividend payment. The stock exchanges need to account for the payment so that investors know who gets it and who doesn't, so they set the ex dividend date, which is the date on which trades of the stock will first trade without the right to receive the dividend payment. (Ex-dividend is usually about 2 days before record date.) These dates are established well before they occur so all market participants can know exactly when this change in value will occur. When trading on ex dividend day begins, there is no authority to set a "different" price than the previous day's closing price. What happens is that all (knowledgeable) market participants know that today Nokia is trading without the payment 55 cents that buyers the previous day get. So what do they do? They take that into consideration when they make an offer to buy stock, and probably end up offering a price that is about 55 cents less than they would have otherwise. Similarly, sellers know they will be getting that 55 cents, so when they choose a price to offer their stock at, it will likely be about that much less than they would have asked for otherwise. |
Are you preparing for a possible dollar (USD) collapse? (How?) | Buying gold, silver, palladium, copper and platinum. The first two I am thinking about new currencies. The last three for the perpetual need for the metals in industry. I also have invested in Numismatic coins. They are small portable and easy to hide around the house. I only collect silver coins, so even if the world really blows up and numismatics goes out the window, I can depend on them forming a barter system through the content value of the silver. The problem with collectable items is that they are easy to see. For example, a nice painting just shouts out "steal me!". I don't buy large gold coins. As long as the coin is below 1/4 Oz gold I collect it. If the dollar does finaly collapse, to be honest it will be so bad that I think weapons will be order of the day. Do I think it will collapse...nah never. |
Should I use a credit repair agency? | Don't use a "credit repair" agency. They are scams. One of the myriad of ways in which they work is by setting you up with a bogus loan, which they will dutifully report you as paying on time. They'll pretend to be a used car dealer or some other credit-based merchant. For a time, this will actually work. This is called "false reporting." The problem is, the data clearinghouses are not stupid and eventually realize some hole-in-the-wall "car dealer" with no cars on the lot (yes, they do physical inspections as part of the credentialing process, just sometimes they're a little slow about it) is reporting trade lines worth millions of dollars per year. It's a major problem in the industry. But eventually that business loses its fraudulent reporting ability, those trade lines get revoked, and your account gets flagged for a fraud investigation. The repair agency has your money, and you still don't have good credit. Bad news if this all goes down while you're trying to close on a house. You're better off trying to settle your debts (usually for 50%) or declaring bankruptcy altogether. The latter isn't so bad if you're in a stable home, because you won't be able to get an apartment for a while, credit cards or a good deal on auto financing. ED: I just saw what one agency was charging, and can tell you declaring bankruptcy costs only a few hundred dollars more than the repair agency and is 100% guaranteed to get you predictable results as long as you name all your debts up front and aren't getting reamed by student loans. And considering you can't stomach creditors-- well guess what, now you'll have a lawyer to deal with them for you. Anything you accomplish through an agency will eventually be reversed because it's fraudulent. But through bankruptcy, your credit will start improving within two years, the tradeoff being that you won't be able to get a mortgage (at all) or apartment (easily) during that time-- so find a place to hunker down for a few years before you declare. |
Can a company donate to a non-profit to pay for services arranged for before hand? | Can a company say "StackExchange" donate to a non-profit company say $5,000 in agreement that they will spend that on paying a designer for a new website? And most importantly is this donation still tax deductible? A non-profit would have to typically create a bucket for IT Services or Website design. As long as "StackExchange" specify they employ a profession service to get it done, there would be no issue. If "StackExchange" were to specify an individula/company it would be an issue. |
How does one typically exit (close out) a large, in-the-money long put option position? | The question is, how do I exit? I can't really sell the puts because there isn't enough open interest in them now that they are so far out of the money. I have about $150K of funds outside of this position that I could use, but I'm confused by the rules of exercising a put. Do I have to start shorting the stock? You certainly don't want to give your broker any instructions to short the stock! Shorting the stock at this point would actually be increasing your bet that the stock is going to go down more. Worse, a short position in the stock also puts you in a situation of unlimited risk on the stock's upside – a risk you avoided in the first place by using puts. The puts limited your potential loss to only your cost for the options. There is a scenario where a short position could come into play indirectly, if you aren't careful. If your broker were to permit you to exercise your puts without you having first bought enough underlying shares, then yes, you would end up with a short position in the stock. I say "permit you" because most brokers don't allow clients to take on short positions unless they've applied and been approved for short positions in their account. In any case, since you are interested in closing out your position and taking your profit, exercising only and thus ending up with a resulting open short position in the underlying is not the right approach. It's not really a correct intermediate step, either. Rather, you have two typical ways out: Sell the puts. @quantycuenta has pointed out in his answer that you should be able to sell for no less than the intrinsic value, although you may be leaving a small amount of time value on the table if you aren't careful. My suggestion is to consider using limit orders and test various prices approaching the intrinsic value of the put. Don't use market orders where you'll take any price offered, or you might be sorry. If you have multiple put contracts, you don't need to sell them all at once. With the kind of profit you're talking about, don't sweat paying a few extra transactions worth of commission. Exercise the puts. Remember that at the other end of your long put position is one (or more) trader who wrote (created) the put contract in the first place. This trader is obligated to buy your stock from you at the contract price should you choose to exercise your option. But, in order for you to fulfill your end of the contract when you choose to exercise, you're obligated to deliver the underlying shares in exchange for receiving the option strike price. So, you would first need to buy underlying shares sufficient to exercise at least one of the contracts. Again, you don't need to do this all at once. @PeterGum's answer has described an approach. (Note that you'll lose any remaining time value in the option if you choose to exercise.) Finally, I'll suggest that you ought to discuss the timing and apportioning of closing out your position with a qualified tax professional. There are tax implications and, being near the end of the year, there may be an opportunity* to shift some/all of the income into the following tax year to minimize and defer tax due. * Be careful if your options are near expiry! Options typically expire on the 3rd Friday of the month. |
Ray Dalio - All Weather Portfolio | Here are the specific Vanguard index funds and ETF's I use to mimic Ray Dalio's all weather portfolio for my taxable investment savings. I invest into this with Vanguard personal investor and brokerage accounts. Here's a summary of the performance results from 2007 to today: 2007 is when the DBC commodity fund was created, so that's why my results are only tested back that far. I've tested the broader asset class as well and the results are similar, but I suggest doing that as well for yourself. I use portfoliovisualizer.com to backtest the results of my portfolio along with various asset classes, that's been tremendously useful. My opinionated advice would be to ignore the local investment advisor recommendations. Nobody will ever care more about your money than you, and their incentives are misaligned as Tony mentions in his book. Mutual funds were chosen over ETF's for the simplicity of auto-investment. Unfortunately I have to manually buy the ETF shares each month (DBC and GLD). I'm 29 and don't use this for retirement savings. My retirement is 100% VSMAX. I'll adjust this in 20 years or so to be more conservative. However, when I get close to age 45-50 I'm planning to shift into this allocation at a market high point. When I approach retirement, this is EXACTLY where I want to be. Let's say you had $2.7M in your retirement account on Oct 31, 2007 that was invested in 100% US Stocks. In Feb of 2009 your balance would be roughly $1.35M. If you wanted to retire in 2009 you most likely couldn't. If you had invested with this approach you're account would have dropped to $2.4M in Feb of 2009. Disclaimer: I'm not a financial planner or advisor, nor do I claim to be. I'm a software engineer and I've heavily researched this approach solely for my own benefit. I have absolutely no affiliation with any of the tools, organizations, or funds mentioned here and there's no possible way for me to profit or gain from this. I'm not recommending anyone use this, I'm merely providing an overview of how I choose to invest my own money. Take or leave it, that's up to you. The loss/gain incured from this is your responsibility, and I can't be held accountable. |
Total price of (AAPL option strike price + option cost) decreases with strike price. Why? | On July 20, when you posted this question, AAPL was trading almost at 115. The market charges an extra premium for buying an option that is in the money (or on the money like this case) over one that is out of the money. In order for the 130 Call to be worth something the market has to go up 15 points. Otherwise you lose 100% of your premium. On the other hand with the 115 every point that the market goes up means that you recover some of that premium. It is much more likely that you recover part of your premium with the 115 than with the 130. With the higher probability of losing part of the premium, the sellers are going to be reluctant to write the option unless they receive larger compensation. |
Should I continue to invest in an S&P 500 index fund? | Your 5-8 year time frame is interesting because it is actually a two windows. When people are savings for retirement, they tell us how many years or decades they have until they reach retirement age. But they also imply that they are planning on spending decades withdrawing the money. But you wanting the money for a house in 5-8 years are needing the money more like somebody who is saving college money for a teenager. In fact your plan is similar in time frame as a 13 year old has for their college fund; start in 5 years but only have a 4 year spending window. Take the California 529 program: Beneficiary Age 13-14: Beneficiary Age 18+: The funding agreement provides a minimum guaranteed rate of return on the >amounts allocated to it by the Investment Portfolio. The minimum effective >annual interest rate will be neither less than 1% nor greater than 3% at >any time. So you plan of investing 100% in the S&P with your window is way too risky. You should only invest a portion of your down payment in equities, and be prepared to only be in that mode for a few years. Any drop in the market now hurts you, but one just before you need the funds would be devastating. |
what is the point of the part b late enrollment penalty? | The point of the enrollment penalty is basically the same as the ACA penalty. Any sort of health insurance - or really, any insurance - is funded by creating a risk pool of high and low risk people and pricing it so that the overall payments cover the total risk. That means, however, that on average the low risk people end up paying more than their share - more than it would have cost them, without the insurance, excepting any provider agreements to charge less (which is significant in the health insurance business). (Of course some of them do end up using more than they pay - but not on average, assuming the risk was calculated accurately.) While there isn't really a completely low risk pool in Medicare, there is a significant difference in utilization (=cost) between younger (65-70) and older enrollees. As such, for many health 65 year olds, it would be beneficial to not enroll in Medicare right away - delay a few years, if they're fully healthy, and wait until they are less healthy. Since Medicare won't turn you away for pre-existing conditions, that's a risk some would take. In order to accommodate for that, Medicare effectively says, "If you didn't help subsidize the costs of the high users when you were younger, you need to pay more to make up for that fact" - hence the enrollment penalty. The New York Times explains this in part in a 2006 article discussing Part D (which was new that year, and has a similar penalty): The purpose of the late enrollment penalty is to encourage people to sign up as soon as possible, before they have significant drug costs. |
May I claim money earned but not received in 2012 | If you didn't receive the money in 2012 or have constructive receipt you really can't claim the income. If the company is going to give you a 1099 for the work they aren't going to give you one until next year and if you claim it this year you will have a hard time explaining the income difference. On the other hand if this isn't miscellaneous income, but rather self employment income and expenses you should be able to claim the expenses in 2012 and if you have a loss that would carry over to 2013. Note it is possible to use an accrual basis if you are running a business (which would allow you to do this), but it is more complex than the cash accounting individual tax payers use. |
New to Stock Trading | Investopedia got some good tutorials on stocks and a good simulator to play around without loosing hard earned money. http://www.investopedia.com/university/stocks/ http://www.investopedia.com/simulator/ |
Why are American-style options worth more than European-style options? | An option gives you an option. That is, you aren't buying any security - you are simply buying an option to buy a security. The sole value of what you buy is the option to buy something. An American option offers more flexibility - i.e. it offers you more options on buying the stock. Since you have more options, the cost of the option is higher. Of course, a good example makes sense why this is the case. Consider the VIX. Options on the VIX are European style. Sometimes the VIX spikes like crazy - tripling in value in days. It usually comes back down pretty quick though - within a couple of weeks. So far out options on the VIX aren't worth just a whole lot more, because the VIX will probably be back to normal. However, if the person could have excercised them right when it got to the top, they would have made a fortune many times what their option was worth. Since they are Euroopean style, though, they would have to wait till their option was redeemable, right when the VIX would be about back to normal. In this case, an American style option would be far more valuable - especially for something that is difficult to predict, like the VIX. |
Expecting to move in five years; how to lock mortgage rates? | If interest rates have gone up, don't sell when you move. Refinance to lock in a low rate and rent out your current house when you move. Let the rent pay your new mortgage. |
What are the contents of fixed annuities? | For a variable annuity, you need to know the underlying investments and how your returns are credited to your account. For a fixed annuity, the issuer is responsible for the commitment to provide the promised rate to you. In a sense, how they invest isn't really your concern. You should be concerned about the overall health of the company, but in general, insurance companies tend to know their business when they stick to their strengths: writing insurance on groups and producing annuity contracts. I don't care for VAs or the fixed annuities you asked about, but I don't believe they resemble a ponzi scheme, either. |
Does it make sense to buy an index ETF (e.g. S&P 500) when the index is at an all-time high? | In 1929 the Dow Jones Industrial Average peaked at roughly 390 just prior to the Great Depression. It did not return to that level again until 25 years later in 1954. 25 years is a long time to go without any returns, especially if you are a retiree. There is no easy answer with investing. Trying to time the tops and bottoms is widely regarded as a foolhardy endeavor, but whenever you invest you expose yourself to the possibility of this scenario. The only thing I highly recommend is not to base your decision on the historical returns from 1975 to 2000 that the other answers have presented. These returns can be explained by policy changes that many are coming to understand are unsustainable. The growth of our debt, income inequality, and monetary manipulation by central banks are all reasons to be skeptical of future returns. |
Should I pay off a 0% car loan? | Mathematically, the wisest choice is to invest your extra money somewhere else and not pay off your 0% loan early. An extreme example highlights this. Suppose some colossal company offered to loan you a billion dollars at 0 % interest. Would you take it? Or would you say "No thanks, I don't want that much debt." You would be crazy not to accept. You could put that money in the safest investments available and still pocket millions while making the minimum payments back to them. Your choice here is essentially the same, but unfortunately, on much smaller scale. That said, math doesn't always trump other factors. You need to factor in your peace of mind, future purchases, the need for future borrowing, your short term income and job security, and whether you think you can reliably make payments on this loan without messing up and triggering fees that wipe out the mathematical advantage of slow paying the loan. You are fortunate because you really can't make a wrong choice here. Paying off debt is never a bad choice IMO. However, it may not always be the best choice. |
Can my employer limit my maximum 401k contribution amount (below the IRS limit)? | On thing the questioner should do is review the Summary Plan Description (SPD) for the 401(k) plan. This MAY have details on any plan imposed limits on salary deferrals. If the SPD does not have sufficient detail, the questioner should request a complete copy of current plan document and then review this with someone who knows how to read plan documents. The document for a 401(k) plan CAN specify a maximum percentage of compensation that a participant in the 401(k) plan can defer REGARDLESS of the maximum dollar deferral limit in Internal Revenue Code Section 402(g). For example, the document for a 401(k) plan can provide that participants can elect to defer any amount of their compensation (salary) BUT not to exceed ten percent (10%). Thus, someone whose salary is $50,000 per year will effectively be limited to deferring, at most, $5,000. Someone making $150,000 will effectively be limited to deferring, at most, $15,000. This is true regardless of the fact that the 2013 dollar limit on salary deferrals is $17,500. This is also true regardless of whether or not a participant may want to defer more than ten percent (10%) of compensation. This "plan imposed" limit on salary deferral contributions is permissible assuming it is applied in a nondiscriminatory manner. This plan imposed limit is entirely separate from any other rules or restrictions on salary deferral amounts that might be as a result of things like the average deferral percentage test. |
Are there any disadvantages to DHA Investment Properties? | Along with the above reasons, the fact that DHA are under investigation by the Federal Police, should be a red flag to any potential investor. The Federal Police aren't called in over parking fines. The rules that are in place for effective and appropriate management appear to have been compromised. I would like to see DHA's marketing people explain why the Department of Finance called in the Feds. To clarify further, with any investment, the potential investor must satisfy beyond any doubt whether there's a problem with an individual or with the way the organisation is managed as a whole. Look at the Big Four banks. To complete the research I suggest wait until DHA release an appropriate public statement (hopefully a sensible one that is honest- but don't hold your breath). I can see parallels with the recent scandal with HSU. When management is being led away in handcuffs it may be too late to change your mind. |
How do you get out of a Mutual Fund in your 401(k)? | The S&P top 5 - 401(k) usually comply with the DOL's suggestion to offer at least three distinct investment options with substantially different risk/return objectives. Typically a short term bond fund. Short term is a year or less and it will rarely have a negative year. A large cap fund, often the S&P index. A balanced fund, offering a mix. Last, the company's stock. This is a great way to put all your eggs in one basket, and when the company goes under, you have no job and no savings. My concern about your Microsoft remark is that you might not have the choice to manage you funds with such granularity. Will you get out of the S&P fund because you think this one stock or even one sector of the S&P is overvalued? And buy into what? The bond fund? If you have the skill to choose individual stocks, and the 401(k) doesn't offer a brokerage window (to trade on your own) then just invest your money outside the 401(k). But. If they offer a matching deposit, don't ignore that. |
When to trade in a relatively new car for maximum value | Cars depreciate the most their first year after introduction. So you could buy a "new" car in year 2 for the optimal price, and at year 4 (when you finish paying yours off) you could buy the next car in year 2 (this is surprisingly similar to rolling options in a buy-write strategy, an arguably more constructive use of your money) |
Why is Dell currently trading above the buyout price? | Dividends would be a possible factor you are ignoring. If Dell has another quarter or two to pay out dividends that could account for some of the difference there. I don't think there is a confirmed date of when the deal is done yet other than around the end of Dell's second quarter which was in the LA Times link you cited. There is also the potential for the terms of the deal to be revised that is another possibility here. Have you examined other deals where a public company went private to see how the stock performed in the last few months before the deal closed? |
Can I profit from selling a PUT on BBY? | Yes. You got it right. If BBY has issues and drops to say, $20, as the put buyer, I force you to take my 100 shares for $2800, but they are worth $2000, and you lost $800 for the sake of making $28. The truth is, the commissions also wipe out the motive for trades like yours, even a $5 cost is $10 out of the $28 you are trying to pocket. You may 'win' 10 of these trades in a row, then one bad one wipes you out. |
Buy or sell futures contracts | In general there are two types of futures contract, a put and call. Both contract types have both common sides of a transaction, a buyer and a seller. You can sell a put contract, or sell a call contract also; you're just taking the other side of the agreement. If you're selling it would commonly be called a "sell to open" meaning you're opening your position by selling a contract which is different from simply selling an option that you currently own to close your position. A put contract gives the buyer the right to sell shares (or some asset/commodity) for a specified price on a specified date; the buyer of the contract gets to put the shares on someone else. A call contract gives the buyer the right to buy shares (or some asset/commodity) for a specified price on a specified date; the buyer of the contract gets to call on someone for shares. "American" options contracts allow the buyer can exercise their rights under the contract on or before the expiration date; while "European" type contracts can only be exercised on the expiration date. To address your example. Typically for stock an option contract involves 100 shares of a stock. The value of these contracts fluctuates the same way other assets do. Typically retail investors don't actually exercise their contracts, they just close a profitable position before the exercise deadline, and let unprofitable positions expire worthless. If you were to buy a single call contract with an exercise price of $100 with a maturity date of August 1 for $1 per share, the contract will have cost you $100. Let's say on August 1 the underlying shares are now available for $110 per share. You have two options: Option 1: On August 1, you can exercise your contract to buy 100 shares for $100 per share. You would exercise for $10,000 ($100 times 100 shares), then sell the shares for $10 profit per share; less the cost of the contract and transaction costs. Option 2: Your contract is now worth something closer to $10 per share, up from $1 per share when you bought it. You can just sell your contract without ever exercising it to someone with an account large enough to exercise and/or an actual desire to receive the asset or commodity. |
A stock just dropped 8% in minutes and now all of a sudden the only way to buy is on the ask, what does this mean? | You have to look at stocks just like you would look at smaller and more illiquid markets. Stock trade in auction markets. These are analogous to ebay or craigslist, just with more transparency and liquidity. There is no guarantee that a market will form for a particular stock, or that it will sustain. When a stock sells off, and there are no bids left, that means all of the existing bidder's limit orders got filled because someone sold at those prices. There is nothing fishy about that. It is likely that someone else wants to sell even more, but couldn't find any more bidders. If you put a bid you would likely get filled by the shareholder with a massive position looking for liquidity. You could also buy at the ask. |
If I pay someone else's property taxes, can I use it as a deduction on my income tax return? | To make matters worse, if you pay the property tax your mother in law can't take the deduction either. You may be better off paying rent and having her handle the property correctly, as a rental. |
How can I withdraw money from my LLC? | What you're asking about is called a "distribution" when it comes to an LLC. It's basically you paying yourself some or all of the proceeds of the business, depending on how you're set up. You can pay yourself distributions on a regular schedule, say monthly, or you can do it at the end of the year. Whatever you do in this regard, what you take out as distributions is reported on your personal income tax as taxable income. LLCs in the U.S. use pass-through taxation (unless you intentionally elect to have the LLC treated as a corporation for tax purposes, which some people do), so whatever the principals receive in distribution is personally taxable. Keep in mind that you'll have to pay ALL of the taxes normally covered by an employer, such as self-employment tax (usually about 15%), social security tax, and so on. This is in addition to income tax, so remember that. I hope this helps. Good luck! |
How safe is a checking account? | US checking accounts are not really secure, though many people use them. One form of check fraud has been highlighted by Prof. Donald Knuth and carried out by Frank Abagnale, as portrayed in the film Catch Me If You Can. Basically, anyone can write a check that would draw from your account merely by knowing your account number and your bank's ABA routing number. With those two pieces of information (which are revealed on every check that you write), anyone can print a working check, either using a laser printer with MICR (magnetic ink character recognition) toner, or by placing an order with a check-printing company. The only other missing element is a signature, which is a pretty weak form of authentication. When presented with such a check, your bank would probably honor it before finding out, too late, that it is fraudulent. A variant of this vulnerability is ACH funds transfers. This is the mechanism through which you could have, say, your utility company automatically withdraw money from your account to pay your bill. Unfortunately, the transfer is initiated by the recipient, and the system relies largely on trust with some statistical monitoring for suspicious patterns. Basically, the whole US checking system is built with convenience rather than security in mind, since other institutions are able to initiate withdrawal transactions by knowing just the ABA number and account number. In practice, it works well enough for most people, but if you are paranoid about security, as you seem to be, you don't want to be using checks. The European system, which has largely eliminated checks in favor of payer-initiated push transactions, is safer by design. |
Why do people buy stocks that pay no dividend? | Shares in a company represent a portion of a company. If that company takes in money and doesn't pay it out as a dividend (e.g. Apple), the company is still more valuable because it has cold hard cash as an asset. Theoretically, it's all the same whether your share of the money is inside the company or outside the company; the only immediate difference is tax treatment. Of course, for large bank accounts that means that an investment in the company is a mix of investment in the bank account and investment in the business-value of the company, which may stymie investors who aren't particularly interested in buying larve amounts of bank accounts (known for low returns) and would prefer to receive their share of the cash to invest elsewhere (or in the business portion of the company.) Companies like Apple have in fact taken criticism for this. Your company could also use that cash to invest in itself (growing the value of its profits) or buy other companies that are worth money, essentially doing the job for you. Of course, they can do the job well or they can do it poorly... A company could also be acquired by a larger company, or taken private, in exchange for cash or the stock of another company. This is another way that the company's value could be returned to its shareholders. |
Why are there many small banks and more banks in the U.S.? | Wikipedia has a good summary: Historically, branch banking in the United States - especially interstate branch banking - was viewed unfavorably by regulatory authorities, and this was codified with the enactment of the McFadden Act of 1927, which specifically prohibited interstate banking. Over the next few decades, some banks attempted to circumvent McFadden's provisions by establishing bank holding companies that operated so-called independent banks in multiple states. To address this, The Bank Holding Company Act of 1956 prohibited bank holding companies headquartered in one state from having branches in any other state. Most interstate banking prohibitions were repealed by the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994. Research has also found that anticompetitive state provisions restricted out-of-state growth when those provisions were more restrictive than the provisions set by the Interstate Banking and Branching Efficiency Act or by neighboring states. Some states have also had restrictive bank branch laws; for example, Illinois outlawed branches (other than the main office) until 1967, and did not allow an unlimited number until 1993. |
How does start-up equity end up paying off? | The details of how you can convert your 5% equity share to cash or stocks will be detailed in writing in the legal agreement you have already signed. If you do not have any signed written agreement, there is no 5%. Since 0% of anything is zero, you can expect to get $0 some time within the next few years. Lastly, if the person running the business, tells you that there is 5% equity for you, even though it is not in writing, that is extremely unlikely to be the case. This is because the Seller of the equity has no obligation whatsoever to pay you. In fact, they are obligated by their other agreements with actual shareholders not to dilute their equity without good cause. So, odds are, if your agreement is not in writing, not only will it not be honored, but it probably can't be honored. |
Selling put and call Loss Scenario Examples | The question you are asking concerns the exercise of a short option position. The other replies do not appear to address this situation. Suppose that Apple is trading at $96 and you sell a put option with a strike price of $95 for some future delivery date - say August 2016. The option contract is for 100 shares and you sell the contract for a premium of $3.20. When you sell the option your account will be credited with the premium and debited with the broker commission. The premium you receive will be $320 = 100 x $3.20. The commission you pay will depend on you broker. Now suppose that the price of Apple drops to $90 and your option is exercised, either on expiry or prior to expiry. Then you would be obliged to take delivery of 100 Apple shares at the contracted option strike price of $95 costing you $9,500 plus broker commission. If you immediately sell the Apple shares you have purchased under your contract obligations, then assuming you sell the shares at the current market price of $90 you would realise a loss of $500 ( = 100x($95-$90) )plus commission. Since you received a premium of $320 when you sold the put option, your net loss would be $500-$320 = $180 plus any commissions paid to your broker. Now let's look at the case of selling a call option. Again assume that the price of Apple is $96 and you sell a call option for 100 shares with a strike price of $97 for a premium of $3.60. The premium you receive would be $360 = 100 x $3.60. You would also be debited for commission by your broker. Now suppose that the price of Apple shares rises to $101 and your option is exercised. Then you would be obliged to deliver 100 Apple shares to the party exercising the option at the contracted strike price of $97. If you did not own the shares to effect delivery, then you would need to purchase those shares in the market at the current market price of $101, and then sell them to the party exercising the option at the strike price of $97. This would realise an immediate loss of $400 = 100 x ($101-$97) plus any commission payable. If you did own the shares, then you would simply deliver them and possibly pay some commission or a delivery fee to your broker. Since you received $360 when you sold the option, your net loss would be $40 = $400-$360 plus any commission and fees payable to the broker. It is important to understand that in addition to these accounting items, short option positions carry with them a "margin" requirement. You will need to maintain a margin deposit to show "good faith" so long as the short option position is open. If the option you have sold moves against you, then you will be called upon to put up extra margin to cover any potential losses. |
How much can I withdraw from Betterment and be considered long-term investment? | No matter what, you owe taxes on the gains, known as capital gains. How much, depends on how long you invested it for. In your example, each month is treated separately - each month you contribute starts a new clock on that set of investments. If you hold it for longer than a year, the taxes are treated as long-term, and less than a year is short-term. Short term taxes are at your marginal rate, and long term taxes are different, usually 15%. https://www.irs.gov/taxtopics/tc400/tc409 |
Cash flow implications of converting primary mortgaged residence to rental | You have some of the math right, but are missing a few things. Here's what I can offer - if I leave anything out, someone please expand or clarify. Rental income can be reduced by mortgage interest and maintenance costs (as you mentioned), but also by property tax payments, association fees, insurance costs, landlord expenses, and depreciation. Note that if you don't live in the property for 3 years, you'll have to pay capital gains tax if/when you sell the house. You can live in it again for 2 of the last 5 years to avoid this. Many people recommend only assuming you will get 10 months of rental income a year, to account for transitions between tenants, difficult in finding new tenants, and the occasional deadbeat tenant. This also adds a buffer for unexpected problems you need to fix in the house. If you can't at least break even on 10 months of income a year, consider the risk. I think there are also some cases where you need to repay depreciation amounts that you have deducted, but I don't know the details. Renting out a house can be fun and profitable, but it's very far from a sure thing. I'd always recommend preparation and caution, and of course talking to professionals about the finances, accounting, and lease-writing. Good luck! |
How did I end up with a fraction of a share? | It's not that uncommon but it doesn't usually come from standard purchases. Investopedia explains: Definition of 'Fractional Share' A share of equity that is less than one full share. Fractional shares usually come about from stock splits, dividend reinvestment plans (DRIPs) and similar corporate actions. Normally, fractional shares cannot be acquired from the market. However, there is at least one investment firm that markets itself as offering fractional shares. Fractional investing makes more sense, since an investor's perspective is to invest a certain number of dollars into equity, not to buy a certain number of shares that closely mirror the dollar commitment. |
Unmarried couple buying home, what are the options in our case? | You've laid out several workable options. You might try going to mortgage broker and looking at what offers you get each way. I can say that it sounds like your partner will have a difficult time qualifying for a mortgage. That puts you on the first and third options. Forget about "building equity." You cannot rely on the house you're living in to provide a return on investment. Housing is an expense, even if you own it outright. Keep that in mind when you consider taking from the stream of money contributing to your retirement. This link is to a blog which really clarifies the "rent vs. own, which is better?" question. The answer is, it depends on the individual and the location, and the blogger in the link explains how to answer that question for your situation. One of the key advantages of ownership is that it gives you freedom to modify the interior, exterior, and grounds (limited by local building codes of course.) |
Are my parents ripping me off with this deal that doesn't allow me to build my equity in my home? | Ripped off may be too strong as it implies intent - I'm hopeful it's just bad logic or terminology. I would say better agreements would be: Borrowing money from family/friends is always risky. If you and your parents are comfortable with the situation and can reliably keep records of how much is owed at any given time (and how much of the $500/mo is interest) then the loan might be a good option. If not, and your parents don't need the income stream from the loan, then I would recommend the second option since it's much cleaner. In any case, make sure everything is in writing and the proper legal procedures are followed (just as if you had borrowed the money from a bank). That means either filing a mortgage with the county for option 1 or having both parties on the deed, and having the ownership percentages in writing. |
What does quantitative easing 2 mean for my bank account? | Probably means next to zero chance of having decent rates on savings accounts for the near future - who needs your money if banks can have government money for free? Probably no short-term effects on you besides that. |
What can I replace Microsoft Money with, now that MS has abandoned it? | I use GnuCash which I really like. However, I've never used any other personal finance software so I can't really compare. Before GnuCash, I used an Excel spreadsheet which works fine for very basic finances. Pros Cons |
Is insurance worth it if you can afford to replace the item? If not, when is it? | Generically, like farnsy noted in the other answer, you will only come ahead in dollar terms when you are significantly riskier than the average insuree. Otherwise the insurance company would have higher rates to make a profit. In the case of Apple Care there can arguably be other factors involved. If you did not insure your $2000 laptop and it broke (unfixably) just after the warranty period, would you replace it with a new Apple product? Maybe not, so Apple could lose a customer. That means they have an incentive to keep you happy. If your product breaks but insurance replaces it, you are a happier customer and more likely to buy other Apple products. This is not an incentive for traditional insurance companies that only do business in insurance. Now, with the profit margins Apple likes in general, I don't know if they've underpriced their insurance. I sort of doubt it even. But their margins on it are probably not high, meaning it's a closer call even if you are only averagely risky. |
Is 0% credit card utilization worse than 1-20% credit card utilization for any reason other than pure statistics? | One rule of thumb is that having regular activity on at least three different revolving accounts will improve your score: I agree that it may not be a great idea to have too many open credit accounts (Trade Lines) reporting on your credit report but if you don’t have enough active accounts, it will prevent you from being approved for a home mortgage. Both Conventional (Fannie Mae and Freddie Mac) mortgage loans and Government loans (such as FHA and VA) require that you have a minimum number of reporting trade lines that are active or have been active within the most recent 24 month period of time. An example of meeting the mortgage loan requirement is having a revolving account (credit card) that has been reporting activity for the past 24 months plus 2 other trade lines that have had activity reported for 12 months each, both within the past 24 months. |
I'm 23, living at home, and still can't afford my own property. What could I do? | I wouldn't be too concerned, yet. You're young. Many young people are living longer in the family home. See this Guardian article: Young adults delay leaving family home. You're in good company. Yet, there will come a time when you ought to get your own place, either for your own sanity or your parents' sanity. You should be preparing for that and building up your savings. Since you've got an income, you should – if you're not already – put away some of that money regularly. Every time you get paid, make a point of depositing a portion of your income into a savings or investment account. Look up the popular strategy called Pay Yourself First. Since you still live at home, it's possible you're a little more loose with spending money than you should be – at least, I've found that to be the case with some friends who lived at home as young adults. So, perhaps pretend you're on your own. What would your rent be if you had to find a place of your own? If, say, £600 instead of the £200 you're currently paying, then you should reduce your spending to the point where you can save at least £400 per month. Follow a budget. With respect to your car, it's great you recognize your mistake. We're human and we can learn from our mistakes. Plan to make it your one and only car mistake. I made one too. With respect to your credit card debt, it's not an insurmountable amount. Focus on getting rid of that debt soon and then focus on staying out of debt. The effective way to use credit cards is to never carry a balance – i.e. pay it off in full each month. If you can't do that, you're likely overspending. Also, look at what pensions your employer might offer. If they offer matching contributions, contribute at least as much to maximize the tax free extra pay this equates to. If you have access to a defined benefit plan, join it as soon as you are eligible. Last, I think it's important to recognize that at age 23 you're just starting out. Much of your career income earning potential is ahead of you. Strive to be the best at what you do, get promotions, and increase your income. Meanwhile, continue to save a good portion of what you earn. With discipline, you'll get where you want to be. |
How and Should I Invest (As a college 18 year old with minimal living expenses)? | I have about $1K in savings, and have been told that you should get into investment and saving for retirement early. I make around $200 per week, which about $150 goes into savings. That's $10k per year. The general rule of thumb is that you should have six months income as an emergency fund. So your savings should be around $5k. Build that first. Some argue that the standard should be six months of living expenses rather than income. Personally, I think that this example is exactly why it is income rather than living expenses. Six months of living expenses in this case would only be $1250, which won't pay for much. And note that living expenses can only be calculated after the fact. If your estimate of $50 a week is overly optimistic, you might not notice for months (until some large living expense pops up). Another problem with using living expenses as the measure is that if you hold down your living expenses to maximize your savings, this helps both measures. Then you hit your savings target, and your living expenses increase. So you need more savings. By contrast, if your income increases but your living expenses do not, you still need more savings but you can also save more money. Doesn't really change the basic analysis though. Either way you have an emergency savings target that you should hit before starting your retirement savings. If you save $150 per week, then you should have around $4k in savings at the beginning of next year. That's still low for an emergency fund by the income standard. So you probably shouldn't invest next year. With a living expenses standard, you could have $6250 in savings by April 15th (deadline for an IRA contribution that appears in the previous tax year). That's $5000 more than the $1250 emergency fund, so you could afford an IRA (probably a Roth) that year. If you save $7500 next year and start with $4k in savings (under the income standard for emergency savings), that would leave you with $11,500. Take $5500 of that and invest in an IRA, probably a Roth. After that, you could make a $100 deposit per week for the next year. Or just wait until the end. If you invested in an IRA the previous year because you decided use the living expenses standard, you would only have $6500 at the end of the year. If you wait until you have $6750, you could max out your IRA contribution. At that point, your excess income for each year would be larger than the maximum IRA contribution, so you could max it out until your circumstances change. If you don't actually save $3k this year and $7500 next year, don't sweat it. A college education is enough of an investment at your age. Do that first, then emergency savings, then retirement. That will flip around once you get a better paying, long term job. Then you should include retirement savings as an expected cost. So you'd pay the minimum required for your education loans and other required living expenses, then dedicate an amount for retirement savings, then build your emergency savings, then pay off your education loans (above the minimum payment). This is where it can pay to use the more aggressive living expenses standard, as that allows you to pay off your education loans faster. I would invest retirement savings in a nice, diversified index fund (or two since maintaining the correct stock/bond mix of 70%-75% stocks is less risky than investing in just bonds much less just stocks). Investing in individual stocks is something you should do with excess money that you can afford to lose. Secure your retirement first. Then stock investments are gravy if they pan out. If they don't, you're still all right. But if they do, you can make bigger decisions, e.g. buying a house. Realize that buying individual stocks is about more than just buying an app. You have to both check the fundamentals (which the app can help you do) and find other reasons to buy a stock. If you rely on an app, then you're essentially joining everyone else using that app. You'll make the same profit as everyone else, which won't be much because you all share the profit opportunities with the app's system. If you want to use someone else's system, stick with mutual funds. The app system is actually more dangerous in the long term. Early in the app's life cycle, its system can produce positive returns because a small number of people are sharing the benefits of that system. As more people adopt it though, the total possible returns stay the same. At some point, users saturate the app. All the possible returns are realized. Then users are competing with each other for returns. The per user returns will shrink as usage grows. If you have your own system, then you are competing with fewer people for the returns from it. Share the fundamental analysis, but pick your stocks based on other criteria. Fundamental analysis will tell you if a stock is overvalued. The other criteria will tell you which undervalued stock to buy. |
Why do governments borrow money instead of printing it? | Yes - Simply put, printing money is called "monetizing the debt" and would result in some nasty inflation. It's a no-no as it quickly devalues the currency and makes it far more difficult to borrow in the future, an entire generation will remember getting burned by it. If, say, Canada's currency were suddenly worth half as much and you received half your investment back in US dollars (e.g. you paid US$10,000, but now have US$5000) would you ever trust them again? The economy is far more complex than one can discuss here, but the fractional reserve system is the next creator of money, although it's not unlimited, the reserve requirement throttles it back. The demand for loans is impacted both by the rate itself and the bank's willingness to lend. The housing bubble had multiple causes. In a sense Tucson is right. Anything we do to make houses more affordable can cause house price inflation. But - the over the top underwriting had more impact in my opinion. People lost sight of good lending practices. The option rate interest only ARMs were financial time bombs. |
Are these really bond yields? | It's worth pointing out that a bulk of the bond market is institutional investors (read: large corporations and countries). For individuals, it's very easy to just put your cash in a checking account. Checking accounts are insured and non-volatile. But what happens when you're GE or Apple or Panama? You can't just flop a couple billion dollars in to a Chase checking account and call it a day. Although, you still need a safe place to store money that won't be terribly volatile. GE can buy a billion dollars of treasury bonds. Many companies need tremendous amounts of collateral on hand, amounts far in excess of the capacity of a checking account; those funds are stored in treasuries of some sort. Separately, a treasury bond is not a substitute investment for an S&P index fund. For individuals they are two totally different investments with totally different characteristics. The only reason an individual investor should compare the return of the S&P against the readily available yield of treasuries is to ensure the expected return of an equity investment can sufficiently pay for the additional risk. |
How to keep control of shared expenses inside marriage? | Websites like neobudget dot com or mint dot com can help you see where your money is going, especially if you use mostly checks, debit cards, or credit cards for your purchases. They are less useful if you use cash often. |
Has anyone created a documentary about folks who fail to save enough for retirement? | Since your question was first posted, I happened to watch PBS FRONTLINE's The Retirement Gamble, about "America's Retirement Crisis" and the retirement industry. You can watch the entire episode online at the previous link, and it's also available on DVD. Here's a link to the episode transcript. Here's a partial blurb from a post at PBS that announced the episode: If you’ve been watching any commercial television lately, you are well aware that the financial services industry is very busy running expensive ads imploring us to worry about our retirement futures. Open a new account today, they say. They are not wrong that we should be doing something: America is facing a retirement crisis. One in three Americans has no retirement savings at all. One in two reports that they can’t save enough. On top of that, we are living longer, and health care costs, as we all know, are increasing. But, as I found when investigating the retirement planning and mutual funds industries in The Retirement Gamble, which airs tonight on FRONTLINE, those advertisements are imploring us to start saving for one simple reason. Retirement is big business — and very profitable. (... more... ) There's another related PBS FRONTLINE documentary from back in 2006, Can You Afford To Retire? You'll find a link on that page to watch the program online. Finally, I'm also aware of but haven't yet seen a new documentary called Broken Eggs: The Looming Retirement Crisis in America. Looks like it isn't available for online streaming or on DVD yet, but I expect it would be, eventually. |
Exercising an option without paying for the underlying | Unless you want to own the actual shares, you should simply sell the call option.By doing so you actual collect the profits (including any remaining time-value) of your position without ever needing to own the actual shares. Please be aware that you do not need to wait until maturity of the call option to sell it. Also the longer you wait, more and more of the time value embedded in the option's price will disappear which means your "profit" will go down. |
Is Weiss Research, Inc. a legitimate financial research company? | It is a scam organization praying on fear of the simple minded. The facts Edelson presents are not accurate - http://www.sec.gov/litigation/admin/2006/ia-2525.pdf |
Understanding differences between S&P500 index-tracking ETFs | Back in the olden days, if you wanted to buy the S&P, you had to have a lot of money so you can buy the shares. Then somebody had the bright idea of making a fund that just buys the S&P, and then sells small pieces of it to investor without huge mountains of capital. Enter the ETFs. The guy running the ETF, of course, doesn't do it for free. He skims a little bit of money off the top. This is the "fee". The major S&P ETFs all have tiny fees, in the percents of a percent. If you're buying the index, you're probably looking at gains (or losses) to the tune of 5, 10, 20% - unless you're doing something really silly, you wouldn't even notice the fee. As often happens, when one guy starts doing something and making money, there will immediately be copycats. So now we have competing ETFs all providing the same service. You are technically a competitor as well, since you could compete with all these funds by just buying a basket of shares yourself, thereby running your own private fund for yourself. The reason this stuff even started was that people said, "well why bother with mutual funds when they charge such huge fees and still don't beat the index anyway", so the index ETFs are supposed to be a low cost alternative to mutual funds. Thus one thing ETFs compete on is fees: You can see how VOO has lower fees than SPY and IVV, in keeping with Vanguard's philosophy of minimal management (and management fees). Incidentally, if you buy the shares directly, you wouldn't charge yourself fees, but you would have to pay commissions on each stock and it would destroy you - another benefit of the ETFs. Moreover, these ETFs claim they track the index, but of course there is no real way to peg an asset to another. So they ensure tracking by keeping a carefully curated portfolio. Of course nobody is perfect, and there's tracking error. You can in theory compare the ETFs in this respect and buy the one with the least tracking error. However they all basically track very closely, again the error is fractions of the percent, if it is a legitimate concern in your books then you're not doing index investing right. The actual prices of each fund may vary, but the price hardly matters - the key metric is does it go up 20% when the index goes up 20%? And they all do. So what do you compare them on? Well, typically companies offer people perks to attract them to their own product. If you are a Fidelity customer, and you buy IVV, they will waive your commission if you hold it for a month. I believe Vanguard will also sell VOO for free. But for instance Fidelity will take commission from VOO trades and vice versa. So, this would be your main factor. Though, then again, you can just make an account on Robinhood and they're all commission free. A second factor is reliability of the operator. Frankly, I doubt any of these operators are at all untrustworthy, and you'd be buying your own broker's ETF anyway, and presumably you already went with the most trustworthy broker. Besides that, like I said, there's trivial matters like fees and tracking error, but you might as well just flip a coin. It doesn't really matter. |
Is equity research from large banks reliable? | If by "can we trust the analyst recommendations" you mean "are they right 100% of the time" the answer is absolutely no. Analysts are human and make mistakes, some more than others. There are many stories of "superstar managers" that make killings for several straight years, then have a few bad years and lose it all back. However, don't take "you can't trust them" to mean that they are nefarious in some way. While there may be some that recommend stocks for selfish purposes, I suspect that the vast majority are just going off what information they have, and can't predict market behavior or future performance with perfect accuracy. Look at many analysts' recommendations. Do your own analysis. If you're still not comfortable buying individual stocks, then don't buy them. Buy index funds if you are satisfied with market returns, or other mutual funds if you want to invest in specific sectors. Or at the very least make sure you are sufficiently diversified so that you don't lose your entire investment by one bad decision. One rule of thumb is to not have more than 10% of your entire portfolio in any one company. |
Unemployment Insurance Through Options | Options do act, somewhat, like insurance.... However.... An insurance policy will not have such short term expiration time frames. A 20 year term life insurance policy can be thought of as insurance with an expiration. But the expiration on options is in weeks, not decades. So (IMO) options make terrible insurance policies because of the very short term expirations they have. |
Is it preferable to move emergency savings/retirement into offset mortgage? | The way offset mortgages work, you are keeping savings in an account effectively earning the rate of the mortgage. You have the ability to leave it, paying the mortgage off early, or borrowing back, any time. |
Pay off entire mortgage or put into investments | At the area where I live (Finland), banks typically charge a lot more for additional mortgage credit taken after purchasing the house. So, if you are planning to purchase a house, and pay it with a mortgage, you get a very good rate, but if you pay back the mortgage and then realize you need additional credit, you get a much worse rate. So, if this is applicable to your area as well, I would simply buy stocks after you have paid enough of the mortgage that it is only 50% of the house price or so. This is especially good advice if you are young. Also, if your mortgage is a fixed rate and not an adjustable rate mortgage, you probably have a very low permanent interest rate on it as interest rates are low currently (adjustable rate mortgages will also have a low rate but it will surely go up). Some people say there's a bubble currently in the stock market, but actually the bubble is in the bond market. Stocks are expensive because the other alternatives (bonds) are expensive as well. Paying back your mortgage is equivalent to investing money in bonds. I don't invest in bonds at the current ridiculously low interest rates; I merely invest in stocks and have a small cash reserve that will become even smaller as I discover new investment opportunities. I could pay back a significant percentage (about 50%) of the loans I have by selling my stocks and using my cash reserves. I don't do that; I invest in stocks instead, and am planning to increase my exposure to the stock market at a healthy pace. Also, consider the fact that mortgage is cheap credit. If you need additional credit for consumption due to e.g. becoming suddenly unemployed, you will get it only at very expensive rates, if at all. If you're very near the retirement age (I'm not), this advice may not be applicable to you. Edit: and oh, if your mortgage is fixed rate, and interest rates have come down, the bank will require you to pay the opportunity cost of the unpaid interests. So, you may need to pay more than you owe the bank. Edit2: let's assume the bank offered you a 4% fixed rate for a 10-year loan, which you agreed to. Now let's also assume interest rates of new agreements have come down to 2%. It would be a loss to the bank to pay back the amount of the loan (because the bank cannot get 4% by offering somebody else a new loan, only 2%), unless you paid also 10 years * (4% - 2%) * amount = 20% * amount of lost interest income. At least where I live, in fixed rate loans, one needs to pay back the bank this opportunity cost of unpaid interests. |
Entering the stock market in a poor economy | Wow I love some of these answers. Remember why you are investing in the first place. For me I like Dividend stocks and Dividend Capturing. Here is why. With over 3500 dividend stock companies paying out dividends this year, that means I can get a dividend check almost every day. What about if the stock goes down you ask? Well out of these 3500 companies there is a small group of these stocks that have consistently increased their dividend payout to their investors for over 25 years and a smaller group that have been increasing every year their pay outs for over 50 years. Yes Kennedy was in office back then and to this day they consistently pay higher and higher dividend payments to their investors, every year... for 50 years. As for the Dividend Capturing strategy, that allows me to collect up 10-20 checks per month with that little effort. As for the stock going down... Here is a little tidbit that most buyers overlook. Stock price is more or less the public's perception of the value of a certain company. Earnings, balance sheet, cash flow, market cap and a few other things in the quarterly report will give you a better answer to the value of a company. If stock price goes down while earning and market go keep going up... what does that tell you? |
Capitalize on a falling INR | One simplest way is to to do Forex trading. You can do this by buying Foreign Currency Futures when you feel Rupee is going down or by selling those Futures when you feel Rupee will go up. |
Why is company provided health insurance tax free, but individual health insurance is not? | This probably is a question that belongs on History but here's the basic reason: the or Employee Retirement Income Security Act (ERISA) of 1974 established that health benefits under approved plans were not taxable to the employee. If the employer were to pay for an employees non ERISA approved individual plan, it would be a taxable benefit. The longer story is that many polticians (esp. President Richard Nixon) were concerned that public pressure was going to lead public sentiment toward nationalized health care. This made health insurance more affordable to employees and effectively made it a cheaper way to compensate employees similar to how 401K contributions are worth more (in nominal terms) to the employee than an equivalent amount of cash. While the law was not signed by Richard Nixon due to some other stuff that was going on, it was something proposed and pushed by his administration. |
How do “held” amounts appear on statements and affect balances of traditional credit cards? | The "hold" is just placeholder that prevents you from overspending until the transaction is settled. The merchant isn't "holding" your money, your bank or card provider is protecting itself from you overdrawing. In general, it takes 1-3 days for a credit transaction to settle. With a credit card, this usually isn't an issue, unless you have a very low credit line or other unusual things going on. With pre-paid and debit cards, it is an issue, since your spending power is contingent upon you having an available balance. I'm a contrarian on this topic, but I don't see any compelling reason to use debit or stored value cards, other than preventing yourself from overspending. I've answered a few other questions in detail in this area, if you're interested. |
At what interest rate should debt be used as a tool? | This is a very interesting question. I'm going to attempt to answer it. Use debt to leverage investment. Historically, stock markets have returned 10% p.a., so today when interest rates are very low, and depending on which country you live in, you could theoretically borrow money at a very low interest rate and earn 10% p.a., pocketing the difference. This can be done through an ETF, mutual funds and other investment instruments. Make sure you have enough cash flow to cover the interest payments! Similar to the concept of acid ratio for companies, you should have slightly more than enough liquid funds to meet the monthly payments. Naturally, this strategy only works when interest rates are low. After that, you'll have to think of other ideas. However, IMO the Fed seems to be heading towards QE3 so we might be seeing a prolonged period of low interest rates, so borrowing seems like a sensible option now. Since the movements of interest rates are political in nature, monitoring this should be quite simple. It depends on you. Since interest rates are the opportunity cost of spending money, the lower the interest rates, the lower the opportunity costs of using money now and repaying it later. Interest rates are a market mechanism so that people who prefer to spend later can lend to people who prefer to spend now for the price of interest. *Disclaimer: Historically stocks have returned 10% p.a., but that doesn't mean this trend will continue indefinitely as we have seen fixed income outperform stocks in the recent past. |
How do you save money on clothes and shoes for your family? | I feel the same way too! With two kids, I feel like I am spending what it would cost to run a small country just on clothes, shoes, jackets, replacing everything as it is grown out of! A few things I do: I shop in affordable places and check out sales, and look for the cutest things I can find there in a reasonable price range. If you aren't browsing in the $60 baby dresses, you aren't tempted by them. I don't go looking at $60 shirts for my son, he's five and he doesn't need a $60 shirt. I also really only shop for him two or three times a year for clothing...back to school and early spring are the big ones. For fall I got him five pairs of jeans, maybe 8 tops, new socks, etc. I'll add in a couple of heavier sweatshirts, etc as I go, but I really don't browse for him...it's too easy to find something to buy! I look for inexpensive lines for the things that don't really matter...bright T's for my son for summer that just get dirty and spilled on, sleepers, socks, pj's, etc. Joe Fresh, Walmart, Old Navy, Costco. Then I choose a few things that I know I want brand name or more stylish options for, and find ways to buy them more cheaply. These might be things like logo'd fleece tops, trendy jackets, things where the style is actually noticed. I buy jeans at Old Navy for my son when they are on sale, I buy Gusti/Genevieve LaPierre snowsuits at Sears when they are 40% off in Sept/Oct. The Childrens' Place has good quality, stylish clothing for kids and if you watch, they always have deals on their jeans or tops...then I stock up. And for younger kids, Old Navy and The Children's Place jeans have adjustable waistbands. I've already unrolled cuffs and let out the waist in my son's back to school jeans. I have friends who are starting to take in bags of too-small clothing to consignment shops...if they come away with $100, it's still $100! For preteen and teen kids who want certain brands, etc, I think it is very reasonable to say "we will pay x for each pair of jeans, or x for winter boots. If you want to throw in some babysitting/birthday money and go buy something more expensive, you are welcome to do so!" That way, you are still paying for basics, but they can feel like they aren't stuck wearing things they don't like. Tell them...you can buy 5 tops at $x each for back to school, or 10 tops at $x. And lastly, and most sadly of all: buy less..and stop shopping. There, I said it out loud. I try to be careful of what I buy, but I still find things I bought that were never worn. Now I keep a return basket in laundry/mudroom...if I don't love it, if it seems impractical now that I got it home, if I wanted it just in case item #1 didn't work...it goes in the basket. And I return them. I suck it up, I take it with me and go get my money back. Mistakes can be fixed if the items haven't been worn or washed. |
Can a company charge you for services never requested or received? | No. A company cannot bill you for services you did not request nor receive. If they could, imagine how many people would just randomly get bills in their mail. Ignore them. They don't have a contract or agreement with you and can't do anything other than make noise. If they get aggressive or don't stop requesting money, hire an attorney and it will be taken care of. |
Should I buy ~$2200 of a hot stock or invest elsewhere? | Forget investing, you need to focus on managing your debt. I would keep the 6k in a checking or savings account because you need that money in case of an emergency. If you save up more than 10k, use the excess to pay down the principal on your debt. Worry about investing when you have a positive net worth. |
Can I negotiate a credit card settlement by stopping payments? | At no point is it ever a good idea to "stop making payments to show them [you] mean business". When you signed up for the credit card account, you agreed to pay what you charged, and any applicable interested accrued on the accounts. You are legally responsible for that debt, and you can be sued, if they are so inclined. Many times, settlement agencies are employed because a risk assessment operator (or whatever they're called at your cc company) calculated that they are currently financially better off settling for a reduced balance than attempting to chase you for the full amount. As soon as the terms of your refinance hits your credit history, that changes. To reiterate and make it clear: This is a very dangerous approach to breaking credit card debt, and I would not advise that anybody proceed with it. EDIT: If you offer 50% of the balance in a lump sum payment, they decline, and you continue with non-payment, they have reason to believe that you are financially capable of making payments, and are much more likely to seek legal action. |
Should I use my non-tax advantaged investment account to pay off debt? | You could pay off a portion of the debt and your minimum payments should also go down proportionately. Your investment managers may be able to continue making returns in the markets in a sideways and a bear market. So you have 24k contributing to your net worth, and ~50k giving you a negative net worth. At best, you can bring this down to a negative 25k net worth, or you can start and keep using some of the gains from your investment account to supplement your credit payments (along with your income). This is based on chance that your investment managers can continue making gains, compared to paying down 24k and having possibly zero liquid savings now, but having more of your salary to start saving and make the lowered minimum payments, assuming you don't borrow more. Those are the options I've thought of, I don't see either option being necessarily quicker than the other. |
How can I build up my credit history when I have nearly none | What's the fastest way I can raise my credit score from nothing? I worked at a bank for almost 6 years and used their secured credit card. To give you an example of what that did as far as credit was concerned: on Transunion my score increased 200+ points, while on Experian and Equifax, it increased by less than 150. Most customers who used the card also saw an increase, provided that they paid on time and didn't max out the card. Some strategies I used and I recommended to my customers: |
What is the cause of sudden price spikes in the FOREX market? | Forex is really not that volatile compared to other major asset classes like stocks and commodities. But still markets are generally unencumbered in the major pairs and therefore spikes in volatility can happen. Take what happened with the Swiss Franc a few years ago for example, or GBPUSD recently with news of Brexit. This is less the case with highly regulated currencies like the Chinese Yuan (CNY) Volatility is caused by excessive buy or sell pressure in relation to the available liquidity at the current price. This is usually caused by large buy or sell orders placed with interbank desks by institutions (often including other banks) and central banks. News can also sometimes have a dramatic impact and cause traders to adjust their prices significantly and very quickly. |
Does a growing economy mean the economy is becoming less efficient? | It's a kook movie made by folks who combine conspiracy quackery with repackaged socialism. If you're into socialist theory, read Marx or some other intellectual socialist. That said, growth and efficiency are not the same thing. If I'm running a lemonade stand, I can grow by hiring more people at $X/hr or increase efficiency by purchasing an electric juicer and hiring fewer people. |
Does a larger down payment make an offer stronger? | There is some element of truth to what your realtor said. The seller takes the house off the market after the offer is accepted but the contract is contingent upon, among other things, buyer securing the financing. A lower down payment can mean a higher chance of failing that. The buyer might be going through FHA, VA or other programs that have additional restrictions. If the buyer fails to secure a financing, that's weeks and months lost to the seller. In a seller's market, this can be an important factor in how your bid is perceived by the seller. Sometimes it even helps to disclose your credit score, for the same reason. Of course for your situation you will have to assess whether this is the case. Certainly do not let your realtor push you around to do things you are not comfortable with. Edit: A higher down payment also helps in the situation where the house appraisal does not fare well. As @Dilip Sarwate has pointed out, the particular area you are interested in is probably a seller's market, thus giving sellers more leverage in picking bids. All else equal, if you are the seller with multiple offers coming in at similar price level, would you pick the one with 20% down or 5% down? While it is true that realtors have their own motives to push through a deal as quickly as possible, the sellers can also be in the same boat. One less mortgage payment is not trivial to many. It's a complicated issue, as every party involved have different interests. Again, do your own due diligence, be educated, and make informed decisions. |
How to calculate the closing price percentage change for a stock? | The previous day's close on Thursday 10th October was 5,000.00 The close on Friday 11th October is 5,025.92 So the gain on Friday was 25.92 (5025.92 - 5000) or 0.52% (25.92/5000 x 100%). No mystery! |
How to send money across borders physically and inexpensively, but not via cash? | I assume the same criteria apply for this as your previous question. You want to physically transfer in excess of 50,000 USD multiple times a week and you want the transportation mechanism to be instant or very quick. I don't believe there is any option that won't raise serious red flags with the government entities you cross the boundaries of. Even a cheque, which a person in the comments of OP's question suggests, wouldn't be sufficient due to government regulation requiring banks to put holds on such large amounts. |
Apartment Security Deposit refunds in Maryland | In Maryland, a landlord must hold your security deposit in an escrow account and pay you interest when returning the deposit. The interest is simple interest; it does not compound. The interest rate that they must pay has changed over the last 43 years. Before October 1, 2004, the rate was 4%. Until January 1, 2015, the rate was 3%. Currently, the rate is 1.5% OR the simple interest rate accrued at the daily U.S. Treasury yield curve rate for one year, as of the first business day of each year, whichever is greater. (This year, the rate is 1.5%.) Maryland's Department of Housing and Community Development has a Security Deposit Calculator for easy calculation of this interest; however, it only works for deposits since January 1, 2015. It is unclear to me whether the interest rate in effect is the one that was in place when the security deposit was made, or if the rate changes over the years. At most, if you get 4% interest every year, I would expect you to receive $429.76, which is $158 + ($158 * 4% * 43). The interest is accrued every 6 months, so you would not get any interest for the 3 months that you rented in your 44th year. (With the new law that took effect this year, interest is accrued monthly.) At least, if the interest rate changes with the new laws, I would expect you to receive $413.18, which is $158 + ($158 * 4% * 32.5) + ($158 * 3% * 10.25) + ($158 * 1.5% * 0.5). Some text on the Security Deposit Calculator suggests that the laws for Prince George's County are different than the rest of the state. If you are in that county, you'll need to check the local ordinances to see what security deposit policies apply. |
How can I compare the performance of a high dividend funds with other funds and or an index | Vanguard (and probably other mutual fund brokers as well) offers easy-to-read performance charts that show the total change in value of a $10K investment over time. This includes the fair market value of the fund plus any distributions (i.e. dividends) paid out. On Vanguard's site they also make a point to show the impact of fees in the chart, since their low fees are their big selling point. Some reasons why a dividend is preferable to selling shares: no loss of voting power, no transaction costs, dividends may have better tax consequences for you than capital gains. NOTE: If your fund is underperforming the benchmark, it is not due to the payment of dividends. Funds do not pay their own dividends; they only forward to shareholders the dividends paid out by the companies in which they invest. So the fair market value of the fund should always reflect the fair market value of the companies it holds, and those companies' shares are the ones that are fluctuating when they pay dividends. If your fund is underperforming its benchmark, then that is either because it is not tracking the benchmark closely enough or because it is charging high fees. The fact that the underperformance you're seeing appears to be in the amount of dividends paid is a coincidence. Check out this example Vanguard performance chart for an S&P500 index fund. Notice how if you add the S&P500 index benchmark to the plot you can't even see the difference between the two -- the fund is designed to track the benchmark exactly. So when IBM (or whoever) pays out a dividend, the index goes down in value and the fund goes down in value. |
Mortgage sold to yet another servicer. What are my options? | Your mortgage terms are locked in; the servicer/new owner cannot change the terms without your consent, but the servicer can be more aggressive in taking action (as specified in your mortgage contract) against you. For example, if the mortgage agreement calls for penalties for missing a payment or making it late, your friendly neighborhood banker might waive the penalty if the payment is received a day late once (but perhaps not the second or the third time), but the servicer doesn't know you personally and does not care; you are hit with the penalty right away. If the payment was received a day late because of delays in the post office, too bad. If you used a bank bill payment service that "guarantees" on-time arrival, talk to the bank. All perfectly legal, and what you agreed to when you signed the contract. If you can set up electronic payments of your mortgage payments, you can avoid many of these hassles. If you are sending in more money than what is due each month, you should make sure that the extra money reduces the principal amount owed; easy enough if you are sending a physical check with a coupon that has an entry line for "Extra payment applied to principal" on it. But, the best mortgage contracts (from the bank's point of view) are those that say that extra money sent in applies to future monthly installments. That is, if you send in more than the monthly payment one month, you can send in a reduced payment next month; the bank will gladly hold the extra amount sent in this month and apply it towards next month's payment. So, read your mortgage document (I know, I know, the fine print is incomprehensible) to see how extra money is applied. Finally, re-financing your mortgage because you don't like the servicer is a losing proposition unless you can, somehow, ensure that your new bank will not sell your new mortgage to the same servicer or someone even worse. |
Does high frequency trading (HFT) punish long-term investment? | Not really. High frequency traders affect mainly short term investors. If everyone invested long-term and traded infrequently, there would be no high frequency trading. For a long term investor, you by at X, hold for several years, and sell at Y. At worst, high frequency trading may affect "X" and "Y" by a few pennies (and the changes may cancel out). For a long term trader that doesn't amount to a "hill of beans" It is other frequent traders that will feel the loss of those "pennies." |
Can two companies own stock in each other? | Yes, this happens a lot. And in many cases companies don't even know this is happening. Collateralized Debt Obligations frequently contain pieces of the same financial products, where it is not obvious what the underlying asset is. It gets complicated to explain, but I can make an analogy to a portfolio of stocks you might create. Your portfolio contains companies and those companies also own some of the other companies in your same portfolio. The value of all the companies in your portfolio are very interrelated even though you thought you made diversified investments, under the idea that they can't all do poorly at the exact same time. Except they can, if the value of the company's shares are solely based on the value of other company's shares, but nobody noticed that none of them have an actual robust operations. This was a key factor of the financial disaster around 2008, but this problem was solved with the addition of additional disclaimers that all investors agree to, so they know what they are buying |
IRR vs. Interest Rates | IRR is subjective, if you could provide another metric instead of the IRR; then this would make sense. You can't spend IRR. For example, you purchase a property with a down payment; and the property provides cash-flow; you could show that your internal rate of return is 35%, but your actual rate of importance could be the RoR, or Cap Rate. I feel that IRR is very subjective. IRR is hardly looked at top MBA programs. It's studied, but other metrics are used, such as ROI, ROR, etc. IRR should be a tool that you visually compare to another metric. IRR can be very misleading, for example it's like the cash on cash return on an investment. |
How come the government can value a home more than was paid for the house? | Keep in mind, there are times that house is in such bad shape that it's going to need 6 months of renovations, in which case you might ask the town if they are willing to reappraise a lower value until the work is completed. Keep in mind, you'll get a new appraisal when permitted (I mean pulling a permit from the town) work is done. I finished my basement and the town was eager to send the appraiser over even before work was fully complete. |
If I have $1000 to invest in penny stocks online, should I diversify risk and invest in many of them or should I invest in just in one? | These stocks have no value to them, are just waiting for paper work to liquefy and vanish. The other gamblers are bots waiting for some sucker to buy so they can sell right away. So maybe a fresh new penny stock that hasn't been botted yet gives some higher chance of success, but you probably need to be a bot to sell it quickly enough. All in all not that much different from buying regular stocks... |
Why would you ever turn down a raise in salary? | The only valid reason from a financial point of view is if the raise is a promotion or comes with conditions that are unacceptable to you. You may not want added supervisory responsibilties, for example. You need to use discretion when refusing advancement though, at places where I have worked, declining a raise or promotion is seen as a career killer for some circumstances. |
What does the average log-return value of a stock mean? | Knowing the log return is useful - the log return can help you to work out the annual return over the period it was estimated - and this should be comparable between stocks. One should just be careful with the calculation so that allowance for dividends is made sensibly. |
What's wrong with this margin calculation? | As the referenced document says, there are 3 formulas, and you need to use the formula which results the greatest margin requirement. In your case, you need to use the 10% formula: |
Analyst estimates for an insurance company | Something to consider is how broad is Yahoo! Finance taking in their data for making some comparisons. For example, did you look at the other companies in the same industry? On the Industry page, the Top Life Insurance Companies by Market Cap are mostly British companies which could make things a bit different than you'd think. Another point is how this is just for one quarter which may be an anomaly as the data could get a bit awkward if some companies are just coming back to being profitable and could have what appears to be great growth but this is because their earnings grow from $.01/share to $1/share which is a growth of $10,000 percent as this is an increase of 100 times but really this may just be from various accounting charges the company had that hit its reserves and caused its earnings to dip temporarily. |
What are the ins/outs of writing equipment purchases off as business expenses in a home based business? | Keep this rather corny acronym in mind. Business expenses must be CORN: As other posters have already pointed out, certain expenses that are capital items (computers, furniture, etc.) must be depreciated over several years, but you have a certain amount of capital items that you can write off in the current tax year. |
Why is the volume highest at the beginning and end of a trading day? | While volume per trade is higher at the open and to a lesser extent at the close, the overall volume is actually lower, on average. Bid ask spreads are widest at the open and to a lesser extent at the close. Generally, bid ask spreads are inversely proportional to overall volumes. Why this is the case hasn't been sufficiently clearly answered by academia yet, but some theories are that |
Is engaging in stocks without researching unwise? | Stock recommendations and price history are an unwise way to invest. People that recommend stocks are usually compensation for recommending it. They are paid directly by third parties, that can be paid in shares, they can simply own the stock themselves and if the stock goes up they can sell it to new investors at a higher price (or even a lower price, they may not actually care) Price history does not tell you a complete picture, what kind of price history are you even looking at: "this stock went up, let me buy now at the very top and hope it goes higher, am I too late" "this stock went down let me avoid it" if you don't know why, what, who, when, assets, debt, etc, you shouldn't be buying the stock. |
Brent crude vs. USD market value | I don't think the two are particularly linked. While Brick is right in that the price of oil is denominated in dollars, I don't think that's responsible for most of the movement here. Oil has been weak for intrinsic reasons related to oil: supply/demand imbalance, largely. (Oil also was way over-priced back when it was > $100 a barrel; a lot of that was due to worries about instability in the Middle East.) The dollar has been strong for other, separate intrinsic reasons. The American economy has had a stronger rebound than Europe or Asia; while we were hit hard in the 2008 recession, we rebounded pretty quickly from a whole-economy point of view (we still have a lot of weaknesses in terms of long-term unemployment, but that doesn't seem to be hurting our productivity much). Pick another time period, and you won't necessarily see the same matching path (and I would even say that those paths don't match particularly well). Marketwatch covered this for example; other sites show similar things. There is a weak correlation, but only in the short term, or for specific reasons. |
What kind of symbol can be shorted? | Any publicly traded financial instrument can be sold short, in theory. There are, however, many regulations associated with short sales of US equities that may prevent certain stocks from being sold short at certain times or through certain brokers. Some examples: the most basic requirement (this isn't a regulation, it's just the definition of a short sale) is that you or your broker must have access to someone willing to loan you his/her shares. If you are interested in shorting a security with few shares outstanding or low trade volume, there may simply not be enough people in the world willing to loan you theirs. Alternatively, there may be a shareholder willing to loan shares, but your broker may not have a relationship with the clearing house that shareholder is using. A larger/better/different broker might be able to help. threshold securities list - since 2005, each day certain securities are not allowed to be sold short based on their recent history of liquidity. Basically, if a certain number of transactions in a security have not been correctly settled over the past few days, then the SEC has reason to believe that short sales (which require extra transactions) are at higher risk of falling through. circuit breaker a.k.a. alternative uptick - since 2011, during certain market conditions, exchanges are now required to reject short sales for certain securities in order to prevent market crashes/market abuse. |
Retirement & asset allocation of $30K for 30 year old single guy | I would definitely recommend putting some of this in an IRA. You can't put all $30K in an IRA immediately though, as the contribution limit is $5500/year for 2014, but until April 15 you can still contribute $5500 for 2013 as well. At your income level I would absolutely recommend a Roth IRA, as your income will very likely be higher in retirement, given that your income will almost certainly rise after you get your Ph.D. Your suggested asset allocation (70% stocks, 30% bonds) sounds appropriate; if anything you might want to go even higher on stocks assuming you won't mind seeing the value drop significantly. If you don't want to put a lot of energy into investment choices, I suggest a target retirement date fund. As far as I am aware, Vanguard offers the lowest expenses for these types of funds, e.g. this 2050 fund. |
How does the world - in aggregate - generate a non-zero return? | I think you'll find some sound answers here: Money Creation in the Modern Economy by the Bank of England Where does money come from? In the modern economy, most money takes the form of bank deposits. But how those bank deposits are created is often misunderstood. The principal way in which they are created is through commercial banks making loans: whenever a bank makes a loan, it creates a deposit in the borrower’s bank account, thereby creating new money. This description of how money is created differs from the story found in some economics textbooks. |
Warrant shares/UNIT | A warrant is similar to a call option (the right to buy stock at a certain price), with the difference that warrants are filled by the issuing company with new shares, diluting the existing shareholders' ownership. The language is a bit confusing, but how I interpret it is: So your 9,000 shares will get you 3,000 shares and 3,000 warrants (the right to buy shares at a maximum price of 0.27 between April 2, 2018 and April 30, 2018. I think the phrase "The subscription price is SEK 0.27 per Unit" means that you can buy each unit for 0.27 SKE (which gets you one share and one option to buy another share. |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.